SmithKline executives go on charm offensive

SMITHKLINE Beecham yesterday launched a hectic round of meetings with its institutional shareholders designed to ward off a hostile bid from Glaxo Wellcome after merger talks between the two drugs giants collapsed last week.

SmithKline is telling shareholders over the next few days that it has a strong future and can survive as an independent group. It is also stressing that its top executives are united in their opposition for a deal with Glaxo. Institutions have also been assured that the board is right behind Jan Leschly, the group's chief executive, over his decision to call off the merger talks after what he deemed to be a betrayal by Glaxo when it tried to change the original terms of the deal.

Industry sources suggest SmithKline is confident it can enlist enough support from fund managers to deter a takeover by Glaxo. However, a number of shareholders remain disgruntled that they have lost out on more than pounds 15bn of value that would have been created by a merger and speculation in the City is mounting that Glaxo will launch a hostile bid within the next few days.

Mr Leschly and his deputy, Jean-Pierre Garnier, are being accompanied by the non-executive chairman, Sir Peter Walters, on SmithKline's charm offensive, which will be used to try to restore the group's battered reputation after it called off two mergers within a month.